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Race and housing: The path forward

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Cities with the highest percentage of minority homeowners, 2019

Data: U.S. Census; Chart: Kavya Beheraj/Axios

Some cities are defying the trend of the homeownership gap between Black and white Americans — which is worse today than when race-based housing laws and policies were in effect decades ago.

The big picture: An Axios analysis of census data shows that some large cities like Fort Worth, Texas, and midsize cities like Gilbert, Arizona, have higher rates of homeownership for people of color than other cities of the same size.

The homeownership rates are above the national averages — and sometimes well exceed them — despite high rates of poverty in some of the cities.

The rates show that despite systemic barriers, Black Americans, Latinos and Asian Americans are navigating mortgage denial rates and decades of unequal access to financing in some cities where they have more political and demographic power. 

By the numbers: El Paso, Texas, ranks as the top large city for minority homeownership, according to an analysis using the Census Bureau's 2019 American Community Survey five-year estimates and a study by Constructioncoverage.com, a website that covers news for builders. 

The West Texas city had a minority homeownership rate of 58.5%. 

Albuquerque, New Mexico, ranked second among large cities with a minority homeownership rate of 54.6%.

Elk Grove, California, and Port St. Lucie, Florida, topped midsize cities with minority homeownership rates of more than 72%, while the small Houston suburb of Sugar Land, Texas, had the highest rate in the nation at 82.5%.

Between the lines: Officials in El Paso and Albuquerque say a diverse workforce among mortgage brokers, real estate agents and local banks likely contributed to high rates of homeownership for people of color.

Michelle Melendez, director of Albuquerque's Office of Equity and Inclusion, tells Axios the city's investments in low-income housing have helped the city's Latinos, who can then go through financial literacy classes and buy a home.

A little more than four in 10 (45%) Black Americans, 49% of Hispanic Americans, and 59% of Asian Americans, Native Hawaiians and Pacific Islanders owned a home in the first quarter of 2022, compared to 74% of white Americans, per the Census Bureau. 

Philadelphia, a city that for decades had struggled with segregation and housing discrimination, had a Black homeownership rate of 48.4% — the highest rate among large cities with 350,000 or more people. 

Ira Goldstein, the president of policy solutions at the Reinvestment Fund, identified a few reasons why Black homeownership rates are high in Philadelphia compared to other major cities, Axios Philadelphia's Taylor Allen reports. 

For one, Philadelphia historically has had a fairly affordable housing market compared to other large cities, particularly for first-time homeowners.

In addition, the city is known for using the federal Community Reinvestment Act to encourage commercial banks to provide mortgage loans for people who live in moderate- and low-income neighborhoods. 

Don't forget: Philadelphia also has programs to sustain homeownership, like the Philadelphia Mortgage Foreclosure Diversion Program, which requires homeowners and mortgage companies to go through mediation to work out an agreement before a judgment moves forward. 

There's also the Homeowners' Emergency Mortgage Assistance Program, a statewide program for homeowners who may be at risk of losing their homes because of financial hardship.

Detroit, a place that has suffered from years of white flight and an eviction crisis, has a Black homeownership rate of 45.9%. 

This number is high compared with the national average. But homeownership in Detroit — a city where 77% of residents are Black — has fallen, Axios Detroit's Annalise Frank reports.

The city flipped from majority homeowner to majority renter sometime in the mid-2010s. 

State of play: Mortgages to Black residents are on the rise, from just 130 in 2012 to 919 in 2020, according to think tank Detroit Future City. Meanwhile, mortgages to white residents have plateaued at around 600 for the last couple of years.

"This is due in part to increased lending across a larger area of the city to African-American homebuyers and improvements in the housing market," DFC's report reads. 

Yes, but: Black home purchase lending applicants are still getting denied at more than twice the rate of white applicants. 

Washington, D.C., is moving ahead with a program to increase Black homeownership. Mayor Muriel Bowser's new Strike Force initiative will help determine how to use the city's $10 million Black Homeownership fund, Axios D.C.'s Paige Hopkins reports.

The fund, which is a part of the mayor's 2023 budget, is one aspect of a larger plan to increase the number of Black homeowners in the District by 2030.

In the District, 34% of homeowners are Black compared to 49% of white residents, according to the mayor's office.

Just outside of D.C. in Prince George's County, Maryland, there is a large concentration of wealthy Black homeowners. Brookings Metro fellow Tracy Hadden Loh says, "Exclusion from other suburbs" is one of the reasons Black homeowners historically found their way to Prince George's County.

Additionally, the D.C. region has more Black-owned businesses than other parts of the country. "This is like a positive and self-reinforcing cycle in terms of creating Black wealth," Loh says of homeownership supporting entrepreneurship and vice versa.

Why the racial homeownership gap persists

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1. Where homeownership by people of color thrives

Large cities like Fort Worth and Albuquerque have high homeownership rates for people of color.

Deep Dive: Hard Truths - Housing

Some cities are defying the trend of the homeownership gap between Black and white Americans — <a class="gtmContentClick" data-vars-link-text="which is worse today" data-vars-click-url="https://www.axios.com/2020/12/19/hard-truths-deep-dive-housing-racial-homeownership-gap" data-vars-content-id="f848be72-17fe-45de-a490-d4ba99a9020e" data-vars-headline="Where homeownership by people of color thrives" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2020/12/19/hard-truths-deep-dive-housing-racial-homeownership-gap" target="_self">which is worse today</a> than when race-based housing laws and policies were in effect decades ago.The big picture: An Axios analysis of census data shows that some large cities like Fort Worth, Texas, and midsize cities like Gilbert, Arizona, have higher rates of homeownership for people of color than other cities of the same size.

2024 will be an election year like no other, as President Biden seeks re-election amid economic uncertainty, two wars and questions about his age. His likely foe, former President Trump, faces felony charges and vows revenge on his political enemies. Meanwhile, Americans generally are dissatisfied with those choices and are divided over immigration, race, education and more.

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Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

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After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

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U.S. homeownership rates, by race/ethnicity

Data: U.S. Census Bureau; Chart: Simran Parwani/Axios

For more than a year, Black and Hispanic homebuyers have gotten $5,000 in down payment or closing cost assistance from JPMorgan Chase, part of a new program meant to help close the racial wealth gap. 

Why it matters: If adopted on a wider scale, this kind of targeted program — which specifically tracks lending to borrowers of color, a radical departure — might help increase Black homeownership rates. JPMorgan is the first bank to give it a try.

These types of programs "could provide the kind of homeownership boost to Black communities today that the New Deal provided to white people in the 20th century," write the authors of a February paper published by the Urban Institute.

How it works: The bank created what's known as a special purpose credit program (SPCP), a policy made possible by the 1974 Equal Credit Opportunity Act that's gaining traction now, especially after federal regulators across several agencies issued a statement on SPCPs in February.

The law prohibits discrimination in lending, but there's an exception allowing banks to create these SPCPs for disadvantaged classes of borrowers.

JPMorgan implemented the program in specific census tracts with majority Black populations. There are 6,700 such areas across the U.S.

The bank chose this route instead of simply offering the money to Black borrowers because it's tricky to track the race or ethnicity of homebuyers while staying in line with non-discrimination laws.

Yes, but: The bank wouldn't say how many borrowers have received the grants, but even if the numbers were substantial, one bank's program is small relative to the massive size of the U.S. mortgage market. Close to 70% of mortgages are not originated by banks in the U.S.

Gentrification is a "potential unintended consequence" here, Cerita Battles, the bank's managing director and head of community and affordable lending, said at a recent panel on SPCPs. 

The grants could wind up going to white borrowers seeking to move to Black neighborhoods. She said the bank is closely monitoring the process to avoid this. So far, 57–60% of the bank's SPCP assistance has gone to Black and Hispanic customers, she said.

The program could also reinforce already existing housing segregation.

The backstory: The large gap in homeownership rates between Black and white Americans drives a massive wealth gap, which in turn perpetuates inequality, as banks typically want to lend to borrowers who already have money.

This gap is deeply rooted in the U.S. housing system, but after the protests during the summer of 2020, the bank pledged to spend $30 billion over five years to address racial inequity in lending — the largest such lending commitment at that time, as Axios reported. 

This program is related to that pledge — though there is neither a cap on how much the bank can spend nor a time limit, Ashlei Bobo, a spokesperson at Chase Home Lending, tells Axios.

The program is distinct from other private efforts to close the racial homeownership gap, which target low-income borrowers as a proxy for race. Experts say it's more effective to target the problem more directly.

"We are deluding ourselves if we believe we will cure centuries of race-based discrimination without targeted measures," wrote the authors of a piece on SPCPs at the National Fair Housing Alliance.

What they're saying: Walter Suazo, a 27-year-old restaurant consultant in New York, used the SPCP program to buy a one-bedroom apartment last year. He's the first in his family to be able to own his own home. 

Suazo, who is Hispanic, hopes more people will take advantage of the program, which he learned about when he went to the bank to apply for his mortgage. "I know JPMorgan has money to give," he said.

What to watch: In early June, Fannie Mae —a pivotal player in the mortgage market — made SPCPs a central part of a new plan aimed to encourage racial equity in housing.

2. One bank's program to boost Black homeownership

The JPMorgan Chase program helps with down payments and closing costs.

For more than a year, Black and Hispanic homebuyers have gotten <a class="gtmContentClick" data-vars-link-text="$5,000 in down payment" data-vars-click-url="https://media.chase.com/news/chase-homebuyer-grant" data-vars-content-id="88a62072-28b6-409f-961d-b81b1c7ce597" data-vars-headline="One bank&#x27;s program to boost Black homeownership" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://media.chase.com/news/chase-homebuyer-grant" target="_blank">$5,000 in down payment</a> or closing cost assistance from JPMorgan Chase, part of a new program meant to help close the racial wealth gap. Why it matters: If adopted on a wider scale, this kind of targeted program — which specifically tracks lending to borrowers of color, a radical departure — might help increase <a class="gtmContentClick" data-vars-link-text="Black homeownership rates" data-vars-click-url="https://www.axios.com/2020/12/19/hard-truths-deep-dive-housing-racial-homeownership-gap" data-vars-content-id="88a62072-28b6-409f-961d-b81b1c7ce597" data-vars-headline="One bank&#x27;s program to boost Black homeownership" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2020/12/19/hard-truths-deep-dive-housing-racial-homeownership-gap" target="_self">Black homeownership rates</a>. JPMorgan is the first bank to give it a try.

Philadelphia is experimenting with a new way to help renters: an "eviction diversion" program that requires landlords to go through a mediation process when a tenant is in danger of being kicked out.

Why it matters: Evictions disproportionately impact Black women in Philadelphia, which also mirrors national trends, according to research from Community Legal Services.

On a national level, Black Americans make up 20% of renters — yet they make up one-third of people who receive eviction filings, according to Carl Gershenson, a project director at The Eviction Lab.  

How it works: Landlords must go through the eviction diversion process with tenants before they can file an eviction. 

The mediation-based program, originally designed as an emergency response to the pandemic, is designed for landlords and tenants to settle on an agreement without the involvement of a filing that can harm a tenant's credit and make finding a future residence difficult.

Right after Mafieyah Robinson moved into her apartment in Roxborough — a northwest neighborhood in Philadelphia where she grew up — in November, she experienced a domino effect of bad luck.

First, she lost her job as a home health aide and then she lost her roommate — all while she was pregnant. She was backed up on a few months of rent by the time her landlord asked her to undergo Philadelphia's eviction diversion process. 

One month after going through the program, Robinson is back on her feet and keeping up with her repayment plan with no eviction filing on her record. 

By the numbers: Since the eviction diversion initiative launched in September 2020, 4,056 pairs of landlords and tenants went through the program. 

Until January of this year, more than 90% of those pairs either reached an agreement or continued to negotiate as rental assistance was in limbo, according to the city.

Philadelphia's eviction filings have crept to 75% of pre-pandemic levels, according to Gershenson.

Yes, but: When the eviction diversion program was extended another year until the end of 2022, it came with some changes — like being a requirement for all evictions, not just those with a COVID-19 hardship.

The program also came under new pressure when the city's rental assistance from the federal government began to run out. Since May 2020, the city dispersed more than $260 million in federal rental assistance.

As time progressed, sources who have worked with the program tell Axios wait times and "graceful exits" increased —when the tenant is so far in arrears that the landlord and tenant both agree the tenant should leave and the landlord doesn't go after the money.

From Jan. 11 to May 26, 2022, the success rate was 67% in reaching agreements, according to the latest figures available. As of this January, the measure of success no longer includes cases that take longer than 30 days to reach an agreement. 

Mary Harper, a housing counselor with the Urban League, tells Axios that the majority of her tenants go the "graceful exit" route. She said she's seen several owe anywhere from $13,000 to $15,000.

Andre Del Valle, the government director of the Pennsylvania Apartment Association, a landlord lobbying group, tells Axios that he wouldn't support extending the program another year under its current conditions. 

Still, many landlords see the program's value. Kyle Hong Ping is a landlord who has gone through the program more than 50 times with various tenants. He wants to see it continue because it gives people a break. 

"I like it because you're not in court, which can be intimidating, and there's no filing on their record, which can make it harder for them to get more housing."

Ping tells Axios he also likes that the program helps make those difficult conversations less adversarial. 

What's next: The eviction diversion program is likely to be extended beyond 2022, but it's up in the air as to whether it will remain a requirement before a landlord files an eviction.

The city is budgeting $11.4 million toward eviction prevention and $15.2 million for rental assistance over four years.

Also, the city will approve an additional $15 million in rental assistance for next year's budget. 

The bottom line: The program shows promise and became a national model, but it's still only addressing a portion of the need. It will need additional funding to flourish.

3. Philadelphia tries mediating evictions

Its "eviction diversion" program requires landlords to go through mediation before kicking out renters.

Illustrated collage of Philly row homes and a key ring.

Philadelphia is experimenting with a new way to help renters: an &quot;eviction diversion&quot; program that requires landlords to go through a mediation process when a tenant is in danger of being kicked out.Why it matters: <a class="gtmContentClick" data-vars-link-text="Evictions" data-vars-click-url="https://www.axios.com/2021/08/31/eviction-renters-landlords-tenants-housing-market" data-vars-content-id="6697d0e9-6ca8-494e-ad35-e1631dde2fbe" data-vars-headline="Philadelphia tries mediating evictions" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2021/08/31/eviction-renters-landlords-tenants-housing-market" target="_self">Evictions</a> disproportionately impact Black women in Philadelphia, which also mirrors national trends, according to <a class="gtmContentClick" data-vars-link-text="research from Community Legal Services" data-vars-click-url="https://clsphila.org/wp-content/uploads/2020/12/Breaking-the-Record-Report_Nov2020.pdf" data-vars-content-id="6697d0e9-6ca8-494e-ad35-e1631dde2fbe" data-vars-headline="Philadelphia tries mediating evictions" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://clsphila.org/wp-content/uploads/2020/12/Breaking-the-Record-Report_Nov2020.pdf" target="_blank">research from Community Legal Services</a>.

6. A Lakota-inspired housing solution